More Stories

Informist, Wednesday, Jul. 23, 2025

 

NEW DELHI – The Supreme Court has ruled that no goods and services tax is payable on the regulatory functions of electricity regulators such as the Central Electricity Regulatory Commission and the Delhi Electricity Regulatory Commission. "We do not find any good grounds to entertain these special leave petitions (by Directorate General of GST Intelligence). The Special Leave Petitions are, accordingly, dismissed," said the bench of Justices J.B. Pardiwala and R. Mahadevan. 

 

The court has upheld an order from the Delhi High Court in January striking down show-cause notices issued by an additional director in the Directorate General of GST Intelligence to the Central Electricity Regulatory Commission and the Delhi Electricity Regulatory Commission proposing to tax the regulators on fees received by them for discharging their functions. 

 

In its January order, the high court said, "We find ourselves unable to accept, affirm, or even fathom the conclusion that regulation of tariff, inter-state transmission of electricity, or the issuance of licence would be liable to be construed as activities undertaken or functions discharged in the furtherance of business." The Goods and Services Tax Department had clearly failed to grasp the "indubitable fact" that these functions were being discharged by a quasi-judicial body which had all the trappings of a tribunal, the high court had added.

 

"The grant of a licence to transmit or distribute (electricity) is clearly not in furtherance of business or trade but in extension of the statutory obligation placed upon a commission to regulate those subjects," the high court had said. The Electricity Act, 2003, makes no distinction between the regulatory and adjudicatory functions vested in and conferred upon an electricity commission, it had added. Those functions are placed in the hands of a quasi-judicial body enjoined to regulate and administer electricity distribution, it had said. "Electricity, undoubtedly, is a natural resource which vests in the State. We have thus no hesitation in observing that the SCNs (show cause notices) infringe the borders of the incredible and inconceivable," it had said.

 

The department had claimed to have found that the power regulators were not discharging their GST liabilities on amounts received as tariff and licence fees from various power utilities. According to the notices, these functions of the regulators fall in the category of "support services" to electricity transmission and distribution service providers. The department also said that the Central Electricity Regulatory Commission had failed to carry out a correct self-assessment of its tax liability and thus failed to discharge its integrated GST amounting to INR 1.13 billion for the period between April 2019 and March 2023. A similar notice was issued to the Delhi power regulator.  End

 

Reported by Surya Tripathi

Edited by Tanima Banerjee

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2025. All rights reserved.